Qantas plans blitz to win back passengers

Australia's Qantas Airways plans to cut fares and launch an advertising blitz to win back passengers, a newspaper said, after its showdown with unions caused international travel chaos and left almost 70,000 travellers stranded.

Qantas flights returned to normal on Tuesday for the first time since it grounded its global fleet last weekend, a deliberate tactic to gain the upper hand over trade unions in a labour dispute.

The bold tactic succeeded in spurring local authorities to order an end to all industrial action on Monday and should ensure a speedy resolution, but it also damaged the Qantas brand and left many passengers vowing to shun the airline in future.

Aviation and brand experts say the airline now has a huge job to restore confidence in its brand, which has traditionally stood for safety and reliability, as it prepares for the busy Christmas-New Year holiday season.

"Qantas will cut prices across its international and domestic network, offer grounded passengers special promotional deals, and take out one of the biggest national advertising campaigns in its 90-year history in a bid to win back disenchanted travellers in the lead-up to the peak Christmas period," the Australian Financial Review said.

Qantas also planned to bring in a temporary measure to double the rate of frequent flyer points earned, the newspaper said in its unsourced report.

The airline, which had begun returning to the air on Monday with limited domestic and international schedules, said flights were back to normal on Tuesday, though it would take a few more hours to clear its backlog of disrupted domestic passengers.

"Qantas sincerely regrets the impact on customers of industrial action over recent months and looks forward to a rapid recovery and period of stability," the airline said in a statement announcing that operations were back to normal.

A Qantas spokeswoman declined to immediately comment on the Australian Financial Review's report.

The airline's shares firmed 1.4 percent in a weaker overall market on Tuesday, extending strong gains made on Monday.

The stock has risen 6 percent since CEO Alan Joyce made the decision to ground the airline on Saturday, with investors judging it a tactical victory in a war with unions.

The grounding created a national crisis, prompting the labour-market tribunal to step in. On Monday, the tribunal gave both sides three weeks to settle the dispute or submit to its final ruling on the matter, a tight timeframe that investors believe is more likely to favour Qantas than the unions.

Before the grounding, Qantas said it had lost about A$70 million ($75 million) since September owing to the industrial action in its dispute with three trade unions over pay, working conditions and its plan to base more operations in Asia.

Joyce had complained of "death by a thousand cuts" at the unions' hands.

Trade unions have accused Joyce of risking the 90-year-old airline to pursue a reckless industrial-relations strategy, and one union official has even spoken of a campaign of "civil disobedience" if workers fail to get justice at the tribunal.

Brand expert Tim Heberden, of consultancy Brand Finance, said fare discounting could help win back customers but Qantas needed to be very careful to repair any long-term damage, especially to its reputation for reliability.

"I think Qantas will have to tread very carefully -- not just in the coming months but in the coming years -- to regain lost ground in terms of its reputation," he said.

Domestic rival Virgin Australia has been taking market share from Qantas during the months of union strife, while industry analysts say major global rival Singapore Airlines Ltd is also likely to take market share.

Credit ratings agencies Moody's and Standard & Poor's have both signalled possible credit downgrades for Qantas, citing the grounding and potential for lasting brand damage. Both agencies rate Qantas at the lower end of investment grade.

Another rating agency, Fitch, said late on Monday that there was "potential for management's showdown with labour to drive a material shift in passenger booking trends that could worsen the carrier's revenue performance in coming months".